Comparative Advantage and Renewable Resources

1. What is the difference between absolute advantage and comparative advantage? What products/services does you workplace specialize in? What comparative advantages does your workplace have?

2. www.eia.doe.gov/emeu/international/gas1.xls

That web page lists historical prices, in US$, of gasoline and other sources of energy in the U.S. and in six European countries including: (1) Belgium, (2) France, (3) Germany, (4) Italy, (5) Netherlands, and (6) UK.

Given the data listed on the above web site, which countries would you expect to use renewable sources of energy most intensely and gasoline least intensely? What evidence do you have to support your contentions? How would this information help a business manager involved in international trade make decisions related to the demand for products and services in those seven countries?

Solution Preview

1. What is the difference between absolute advantage and comparative advantage? What products/services does your workplace specialize in? What comparative advantages does your workplace have?

Absolute advantage is for a country, which includes an individual as well as a company in a specific region producing goods/services in a cost-effective manner. However, comparative advantage is considered an exchange that is done mutually when the costs of production are different than that of trade. I offer a number of tutoring services, such as helping those in business, psychology, organizational leadership, sociology and religion. The comparative advantage that my ...

Solution Summary

This solution discussed absolute and comparative advantage as well as countries that are likely to use renewable resources.